Question

Assertion (A): Interest on bearer debentures is paid to a person who produces the interest coupon attached to such debentures.
Reason (R): Bearer debentures are transferred by way of delivery and the company does not keep any record of these debenture holders.

• A. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
• C. Assertion (A) is correct, but Reason (R) is incorrect.
• D. Assertion (A) is incorrect, but Reason (R) is correct.

Hint:

Bearer debentures differ from registered debentures as they are negotiable instruments and do not have recorded holders.

Answer 1

The Correct Option is A

Bearer debentures are transferable by mere delivery, and the company does not maintain records of their holders. The person presenting the coupon attached to such debentures is entitled to receive interest. Thus, both Assertion (A) and Reason (R) are correct, and Reason (R) explains Assertion (A).